As to George Washington's use of the term "Liberal" he is using it in the same sense that the term is still used in Europe AND used in this Country till the 1930s. "Liberal" became a cause to free the people of each country from the various controls imposed on those people for various reasons. The problem with this is most of the Controls liberals of the 1800s wanted were the controls to prevent harm to the country as a whole. For example Corporations. These had been, for all practical purposes through NOT technically legally, illegal for almost 300 years prior to the 1840s. The laws restricting Corporation had been passed do to the power such corporations were capable of gathering to themselves and from the Days of Queen Elizabeth to the coming of the Railroads, these laws kept corporations down. Liberals wanted these laws abolished so they could form Corporations. Corporations were deemed needed do to the great deal of investment capital building a railroad or similar large organization needed. This change in the laws also meant that people lost their ability to truly negotiate a wage, for liberals supported the concept that Government was NOT to interfere with business OR any individual's right to entered into a contract, even if the Contract meant you agreed to work for 24 hours a day for peanuts. Basically this was the concept that the Government's sole job in the economy was to make sure everyone's property right was protected, including your right to agree to work 24 hours a day for peanuts in an unsafe work environment.
Progressives, starting in the late 1800s, opposed the concept that Government Role was only to protect property. They opposed the concept that Government sole job was to enforce contracts, including contracts to work 24 hours a day in an unsafe work environment. Progressives believe it was the job of Government to protect people against the raising power of Corporations, and thus progressives opposed liberals from the start of the progressives in the 1880s onward.
Inf act in the election of 1932, Herbert Hoover challenged FDR to a debate to show which was the greater Liberal, that is the person who support LESS government control over people, as opposed to the Progressives who wanted MORE Government control over business, supported Unions and wanted improve conditions (i.e. Social Security and the rest of the Safety net as we call it today). Liberal also meant no control over people do to race, sex or religion, but those were minor disputes with the Progressives, the big dispute was over what controls you believe the Government MUST do for the common good (i.e. laws that provided unemployment insurance when you lose your job do to no fault of your own, something "Liberals" of the early 20th century opposes for that was up to the individual to prepare for, just like you retirement and your children's education). The term "Liberal Economic Theory" which is the theory the GOP has supported and implemented since Reagan, is an example of what the term "Liberal" means and why many progressives avoid it for it causes nothing but confusion.
This definition of the term "Liberal" is still the use of the term in Europe (Where "Liberal" in a party's name mean it is conservative), and one of the reason you will NOT read it out of Europe. In the US, FDR was the person who renamed progressive politics to be Liberal, for FDR was of the "Liberal" wing of the Democratic Party (i.e. the Equivalent of the DLC Today). FDR accepted radical changed was needed, and let Congress's progressives have they way (Creating Unemployment Insurance, Social Security, Improve ability to form a Union, controls on the Banks etc). Thus Liberalism in the US came to mean that you supported these concepts, concepts that liberals for 100 years prior to the 1930s had opposed.
Now part of this problem was that FDR, to keep Wall Street happy, kept calling his administration "Liberal" NOT "Progressive" to show Wall Street he was NOT a radical and opposes Socialism and other concepts that one of the Job for Government is to help people (i.e. FDR opposed what the progressives wanted except where it was clearly working OR where the Conservative/Liberal groups had no better idea and the true alternative was Communism).
More a note that the term "Liberalism" is reverting back to its origins and the term "Progressive" is making a comeback for the simple reason what we need is progressive economic reforms (If not Socialistic reforms) as opposed to "Liberal economic Theory" reforms.
Liberalism defined:
http://en.wikipedia.org/wiki/Classical_liberalismhttp://en.wikipedia.org/wiki/Economic_liberalismProgressivism:
http://en.wikipedia.org/wiki/Progressive_Erahttp://www.u-s-history.com/pages/h1061.html
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